Algorithmic trading (algo trading) has revolutionized the financial markets by automating the execution of trades based on pre-defined criteria. But is algo trading good to do?
For many people, algo trading offers great advantages. Algorithms can process a lot of data at a very fast speed and make trades at a very low cost. This makes trading much more efficient and profitable. Algorithms can react faster than humans to market fluctuations, allowing traders to take advantage of opportunities that may otherwise not be available. By not having human emotions taking part, there is less emotional risk in trading.
Algorithmic trading is all about using computer algorithms to take control of the trading process. These smart algorithms separate through market data, spot trading opportunities, and place orders for the trader. They can execute trades at lightning speed and in volumes that far surpass what any human could manage, all while keeping emotions out of the equation—something that often clouds human judgment.
At its core, algorithmic trading relies on predefined rules, like price, volume, or time, to determine the optimal moments to buy or sell a security. These rules can range from straightforward to incredibly intricate, weaving in various market factors, technical indicators, and statistical models.
The growth of algo trading has been driven by leaps in technology. With high-speed internet, enhanced data analysis tools, and superior computational power, it’s become much easier to create, backtest, and roll out complex trading strategies. These tech advancements, along with the increased access to financial data, have opened the doors for not just institutional traders but also retail traders to dive into algo trading.
Nowadays, algo trading makes up a heavy chunk of the daily trading volume in financial markets. For instance, in the U.S. stock market, it’s estimated that over 60% of trades are executed using algorithms. This trend underscores the expanding influence of automation in shaping the global financial landscape.
One of the standout perks of algorithmic trading is its speed. Algorithms can analyze massive amounts of market data in real-time and execute trades in the blink of an eye. On the flip side, human traders are limited by their cognitive abilities and can’t react nearly as fast. This speed advantage lets algorithms capitalize on even the tiniest price discrepancies, raking in profits that would be tough to match with manual trading.
Human traders often let their emotions, like fear or greed, cloud their judgment, which can lead to some pretty poor investment decisions. On the other hand, algorithmic trading takes that emotional bias out of the equation. Since algorithms stick to strict, predefined rules, they make trades without getting caught up in the fear of losing money or the temptation to chase after big gains. This results in a more disciplined and consistent approach to trading.
Algo trading systems can be backtested using historical market data, which is a fantastic way for traders to test their strategies without any risk before putting real money on the line. Backtesting helps pinpoint which strategies work best in various market conditions. Plus, algorithms can be fine-tuned and adjusted continuously to keep up with the ever-changing market landscape.
With algo trading, traders can easily diversify their strategies by managing multiple trades at the same time. Algorithms allow them to invest in a range of markets and securities all at once, which helps spread the risk across different assets. This diversification is key to lowering the overall risk of a trading strategy.
Automated systems make trading more efficient, which in turn cuts down on transaction costs. Algorithms can execute trades faster and at lower costs than humans can, especially when you factor in things like bid-ask spreads, slippage, and commissions. For high-frequency traders, those small savings can really add up to significant profits over time.
Algo trading opens the door to executing complex strategies that would be tough for humans to handle manually. For instance, strategies like statistical arbitrage, market making, or pairs trading require quick analysis of huge amounts of data and the ability to make multiple trades simultaneously. These strategies can be effectively carried out through algorithmic trading systems.
Algo trading can be a smart move, but it really depends on what the trader is aiming for, their resources, and their level of expertise. For institutional investors who have access to cutting-edge technology and substantial capital, algorithmic trading can be an incredibly effective way to boost efficiency and profits. On the flip side, retail traders need to think carefully about the costs, complexities, and risks that come with algorithmic trading.
In short, algorithmic trading isn’t a one-size-fits-all approach. Traders must grasp the technology, recognize the potential risks, and thoughtfully evaluate whether the advantages outweigh the hurdles. By doing this, they can make well-informed choices about incorporating algorithmic trading into their investment strategies.
Masala bonds are something that might seem unfamiliar to many people. However, it is not unfamiliar for the people who often deal with the bonds.
Masala bonds were first introduced in 2014 by International Finance Corporation (IFC). Masala bonds are bonds issued outside India by Indian organizations or entities. However, these bonds are issued in Indian currency rather than the local currency.
Indian companies issue masala bonds outside India to raise money from foreign investors. As it is pegged into Indian currency, investors have to bear the loss as the rupee rate falls.
Masala Bond, the name is given by International Finance Corporation (IFC). The term Masala is an Indian word, basically used for spices, to explore the culture and cuisine of India on the international platform.
Masala bonds are rupee-denominated bonds that are issued outside India. They are categorized as debt instruments that help to raise money in local currency from foreign investors. These bonds can be issued by both government and private entities. Any resident of the country can take the subscription of these bonds, however, there are certain conditions are applied.
Investors can only be subscribed to the masala bonds whose security market regulator is a member of the International Organization of Security Commission.
Also, regional financial institutions and multilateral financial institutions can subscribe to these bonds.
According to the RBI, the minimum maturity period for Masala bonds raised to the Rupee equivalent of USD 50 million in a financial year should be 5 years. However, the maturity period is five years for the bonds raised above the rupee equivalent of 50 million dollars in a financial year.
The conversion for such bonds will happen at the market rate on the date of settlement of transactions undertaken for the issue and servicing of the bonds including its redemption.
Masala bonds are directly issued in Indian rupees. i.e. the investors need to carry the exchange rate risks. If a person issues a Masala bond, it will not directly affect the issuer if the rupee rate falls. Instead, the risk goes directly to the investors.
Investors that are residing outside India who want to invest in Indian assets can issue Masala bonds. Several Indian organizations such as NTPC, HDFC, Indiabulls have raised their funds through Masala Bonds.
These bonds can be used:
In refinancing of non-convertible debentures and rupee loan.
Working capital to corporate
For the development of integrated townships and affordable housing projects.
RBI mandates the process raised from these bonds cannot be used -
In real estate activities where the development of integrated township and affordable housing projects takes place.
The benefits for the investors are as follows:
It assists in developing foreign investors’ confidence in the Indian economy.
It offers higher interest rates which in turns benefits the investors
It aids in strengthening the foreign investments in the county as it facilitates the investor’s confidence in Indian currency.
The capital gains from rupee denominations are mostly exempted by the tax.
If the rupee value increases at the time of maturity, it will provide a maximum return to the investors.
Since Masala bonds have no currency risk, it saves the borrower from currency fluctuation.
The borrower can mobilize a huge amount of funds.
It helps the Indian organization in issuing these bonds to diversify their portfolio.
Investors need not worry about rupee depreciation as the issuance of these bonds took place in Indian currency rather than foreign currency.
It helps borrowers to cut down their costs as they are issued outside India at an interest rate below 7%.
As these bonds are issued in the offshore market, it assists borrowers to cover a large number of investors.
Needless to say, Masala bonds are issued in Rupee terms and the interest and principal repayment happens in dollar terms. It can be noted that in this case, the issuer does not bear the currency risk, but the risk is fully associated with the investor.
Earlier, this used to be a major problem for Indian companies that were issuing dollar-denominated bonds in the past. For instance, in 2008, the INR crashed sharply vs US dollars. At that time, the depreciation of INR vs US dollar forced many companies to bankrupt.
To understand the importance of Masala Bond, one needs to understand the risk associated with dollar-denominated bonds through a suitable example:
Suppose company XYZ ltd, issued dollar-denominated bonds of $200 million to its lenders at a 5% interest rate. The exchange rate at that time was Rs55/$. Hence, the company brought in Rs 1100 crores to be deployed into the Indian business. When the bonds were redeemed after 5 years, the prevailing exchange rate was Rs69/$.
As a result, XYZ company Ltd had to pay Rs 1380 crore to repay the $200 million to its lenders.
Apart from the interest rate, the company will have to give an additional Rs 280 crore due to rupee depreciation. Many Indian companies cannot afford this type of currency costs.
Now the question arises, why would foreign investors take the currency risks? There are two reasons: Firstly, investors get attracted by the higher rates of interest that Masala bonds offer. Here, the world's higher yield catches the investor’s attention.
Secondly: Investors are betting whether the INR will remain steady or move upward against the dollar, which means the investors who invest in Masala bonds will get the dual benefit.
The benefit due to higher comparative yields on Masala bonds. Also, investors stand to get more dollars from the same amount of rupees because these bonds will be settled in dollars.
Masala bonds are the rupee-denominated bonds issued outside India by an Indian entity. The bonds are issued in rupee terms and the interest and principal repayment occurs in dollars. Hence these bonds can be a game-changer for Indian companies.
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Mutual funds have emerged as one of the popular investment options among investors. This is because investors find themselves much relaxed while investing in MFs as the money is invested in lots of different sectors so that the fear of losing money has been minimized to a certain extent.
Earlier, investors used to invest in stocks or government securities. People who knew about the stock market only invest in stocks, however, people who had no idea about stocks, preferred to invest in government securities as they found it a better yet safer investment option than stocks.
As time flies, new forms of investments have started to take place. One such investment option is Mutual funds.
A mutual fund is a company that collects money from different people and invests it in stocks, bonds or other securities. Mutual Funds are operated by experts which are also called fund managers who put the fund's assets into different sectors in an attempt to produce capital gain or income for the fund’s investors.
Investors now are taking a huge interest in mutual funds as they are less riskier than stocks. Also, they are actively managed by fund managers who are experts in managing a portfolio, fund allocation and more.
Although there are a lot of investing platforms available now, it's always good to take a sip of knowledge and market knowledge about how a mutual fund works and how to check the performance of a mutual fund company:
So, how do you measure the current performance of a mutual fund?
A study on mutual funds regarding the performance of a mutual fund reveals that the market share and the change in the market share are the most essential metrics to evaluate a company’s performance.
You might have known that the past performance of a mutual fund does not decide the future performance of the same fund. It simply means that you cannot expect a guarantee of ROI from these funds despite having a strong past record. Hence, you need to figure out the other factors that help you to assess the performance of a mutual fund company.
Firstly, you should keep track of your investments so that it will help you to make informed decisions that can lead to higher growth.
There is no need to say that the capital market is volatile which means it keeps fluctuating with the overall economic conditions. These conditions affect the overall asset allocation of the portfolio. For example, the market volatility and continuous changing economic conditions can change the allocation of 50:50 equity-debt to 60:40 equity-debt which can increase the risks of the fund.
Secondly, fund evaluation allows you to compare your investments with similar funds. Hence, a review and balancing may be required to keep the risk profile of the portfolio intact.
Here, we will share all the details about evaluating a mutual fund’s performance:
The purpose of investment should be cleared before investing money into a mutual fund. Always set your investment goals before planning any mutual fund for investment. Once you finalize a mutual fund based on an investment goal, it would be better to evaluate the performance of the fund you have selected.
It may be noted that different mutual funds come with different goals. For example, if someone wants high growth in the long term, and has a high-risk appetite, then he/she can choose equity mutual funds. Therefore, it is important to find out your financial goal first and then decide your investment.
It is difficult to check the performance of a mutual fund in isolation. Hence, it is suggested to make a small list of the best mutual funds in a particular category and compare them regularly among various funds.
Past performance of mutual funds gives no indicator of its future performance. Now, many mutual funds come with a disclaimer stating that past performance cannot provide the guarantee of a mutual fund’s performance.
Although the above statement is considered true to some extent; the past performance of data can provide you with other relevant information. For instance, the historical performance of a mutual fund allows you to map the fund managers’ performance across different market cycles.
If a fund can give higher returns than the benchmark even during the worst market conditions, you can get a realization about how fair it would be in the future.
Needless to say, a mutual fund company charges you for its services and expertise, which is further broken down into other components. The fee changes according to your plan you invest in i.e. direct and regular.
It may be noted that a fund with a higher fee always performs better than other mutual funds.
Markets are volatile and hence every fund is associated with certain risks. Every mutual fund sets its benchmark and therefore they have been always comparing the set benchmarks. Generating returns more than the set benchmark tells many things about a fund manager. I.e. the ability and strategy of a fund manager like how well he/she performed despite similar risks across several market cycles.
Everyone knows that the market is highly volatile, but that doesn’t mean that you need to evaluate your performance daily. On average, you should assess a fund every six months to a year.
Evaluating a fund over a shorter period doesn’t give you accurate information about the performance of a fund.
If all this sounds too much, it’s better for you to invest in regular funds.
The key points mentioned in the blog above will guide you to find the right mutual fund that perfectly suits your investment goals. Do remember, always analyze a fund’s performance according to your set financial goals before you open mutual fund account online.
Gold, a precious metal, has been an integral part of ancient India. For years, Gold has been considered a symbol of wealth, status and an important part of many Indian rituals. Thanks to the metal’s affluence and its usage, gold has shown a great shielding effect against uncertain market conditions i.e. pandemic.As the 2021 quarter comes to an end, gold hasn’t made a great hit. The precious metal has tumbled 19% from its last August and is back where it was in February last year before the pandemic hit the developed world. However, as the quarter-end and the pandemic began, the price of gold has subsequently increased. Gold’s price has suddenly increased and it touched an over a three-month peak on Tuesday as the investors have shown a great interest in the yellow metal. Another important cause behind the sudden rise of gold prices is the second wave of the pandemic, rising inflation, and a weekend US dollar that marks investors to make Gold a hedge option. Also, recently, it has been seen that the gold prices are rising with a decent amount and due to the occasion of Akshay Tritiya, the prices are further increased. The second wave of pandemic gold prices had faced a slight drop but post-Akshay Tritiya occasion, it is again in the spotlight. That means, the prices have recovered and experts say that it will cross the mark of 50000 in July 2021.Even though businesses are suffering and the economy is struggling to come to its normal pace, many people are perplexed as to why gold prices are rising during the weak condition of the economy. Below are the factors that influence gold prices to a greater extent: A lot of things has been said about the factors that influence financial markets, many investors are unaware of the rising prices of gold:
The demand and supply of gold play a crucial role in rising gold’s price. The inadequate availability of gold increases the demand for gold and hence the prices rise as well as the supply is limited.
Gold prices and interest rates are inversely proportional to each other. As interest rates decline, people don’t get good returns. Hence, people are required to split their deposits and buy gold which in turn increases the demand and the price.
RBI plays an important role in affecting gold prices. Indian’s government maintains gold reserves. By doing this, the Indian government can buy and sell gold through the Reserve bank of India. If they purchase or sell more gold, the prices would affect the gold.
Many people buy gold jewellery in India and hence the gold price rises during festivals and wedding seasons.
India’s contribution to global output is observed as less than 1%. Although the country is the second-largest consumer of gold, to meet its metal demand, India also imports a lot of gold from other countries.
The demand for gold rises during the festive and wedding seasons in India as many people wear gold jewelry on occasions. Such things increase the demand for gold which will eventually rise in its prices.
The sudden rise in gold prices makes many investors worried. They fail to recognize the real reasons for rising gold prices. Why are gold prices rising? At what time does the gold price rise? Can they invest in gold now or they have to wait for some months?
Since March 2020, many countries have adopted nationwide lockdown to prevent the spread of Covid 19 infections. It has helped several countries to minimize the spread of coronavirus among people, however, it also caused a lot of economic damage as all the production was closed and imports and exports were cancelled. To get rid of the tough times of the pandemic, people are finding gold as the safest instrument to invest.
When the lockdown had ended in June 2020, many people would think that the businesses would grow faster and the economy would soon recover. Hence, a large number of investors had started investing in high-quality stocks. However, as the myths of economic recovery have faded, people have started to invest in safer options. As a result, gold prices are rising day by day as the people see it as a natural shield or safeguard against inflation and economic instability.
Although increasing demand for gold prices indicates strong demand for gold jewelry, experts believe that the gold prices will reach up to 65000 per 10 gram in the upcoming years. The reason behind the rising demand for gold depends on a lot of factors such as low interest rates, liquidity and availability. Is it a good time to invest in gold? Well, the answer heavily depends on how you see the market. If you think that the economy will take a long time to recover and the interest rates will remain low for a long duration; investing in gold is considered a good option. However, if you think the economy will soon recover and the industries will receive a heavy boom, then you need to look for other investment options i.e. stocks.
As the gold prices are rising day by day, it catches investors' attention. As a result, many investors have started to invest in gold considering it as the safest instrument. However, it is also crucial to think of all the other investment options before making any decision. Hence, before jumping on board, please make sure that your investments flow parallelly with your portfolio, investment strategy and risk tolerance.
In India, insurance plays a crucial role in securing financial stability for individuals and families. It provides a safety net against unforeseen events, such as accidents, illnesses, and even death. With a variety of insurance options available in the market, it’s essential to understand the different types and how they can benefit you.
In this guide, we will explore the various types of insurance available in India, focusing on their importance, features, and benefits.
Insurance acts as a contract, on which is represented by a policy, under which an individual receives financial protection against uncertain life events which causes him/her uncertain financial losses, The reimbursement of these losses are borne by an insurance company. The company collects a sum from an individual which is term as insurance premium which in return assures the person of transferring his risk of uncertainty to the insurance company.
The insurance sector in India broadly classified as:
Life insurance is a contract between the insured (policyholder) and the insurance company, where the insurer agrees to pay a specific amount (sum assured) to the policyholder's beneficiaries upon the insured's death or after a certain period, depending on the type of policy. It acts as a financial cushion for the policyholder's family in case of unfortunate events.
Health insurance covers medical expenses incurred due to illnesses, accidents, or hospitalization. In India, rising healthcare costs make health insurance a critical part of financial planning. It offers coverage for hospitalization, pre- and post-hospitalization expenses, surgeries, and sometimes even daycare treatments.
Motor insurance is mandatory in India for all vehicles, including two-wheelers, cars, and commercial vehicles. It provides financial protection against damages to the vehicle, third-party liabilities, and accidents.
Home insurance provides financial protection to homeowners against damages or losses to their home and belongings due to fire, theft, natural calamities, or other unforeseen events. Given the increasing cost of real estate and home repairs, home insurance offers peace of mind by covering unexpected expenses.
Travel insurance covers risks associated with domestic and international travel, such as medical emergencies, trip cancellations, lost baggage, and passport loss. This insurance provides financial assistance for various travel-related contingencies, making your trips stress-free.
Personal accident insurance provides coverage in case of accidents leading to injuries, disabilities, or death. The policy offers financial compensation to the insured or their family for medical expenses, loss of income, or other financial burdens arising from the accident.
Commercial insurance offers protection for businesses against various risks such as property damage, liability, and employee-related risks. It helps companies manage financial losses due to unforeseen events.
Insurance is a vital tool for managing risks and ensuring financial security in the face of unexpected events. Whether it’s life, health, motor, or home insurance, each type of policy serves a unique purpose, offering peace of mind and financial protection. Understanding the different types of insurance available in India will help you choose the best coverage to meet your personal and professional needs.
Investing in mutual funds can be a great way to grow your wealth over time, but knowing when to exit your investments is just as important as knowing when to enter. Exiting at the right time can help you maximize returns and minimize losses. In this blog, we’ll discuss various scenarios and factors that may indicate it's time to consider exiting your mutual fund investments.
One of the primary reasons to exit a mutual fund is a change in your financial goals. Life circumstances such as marriage, having children, buying a home, or planning for retirement can significantly alter your financial objectives. If your investment strategy no longer aligns with your current goals, it may be time to reevaluate your mutual fund holdings.
Example: If you initially invested in a growth fund to accumulate wealth for a future purchase but now need to access that money sooner, it might be wise to switch to a more stable fund or liquidate your investment.
Mutual funds are expected to perform well over time, especially compared to their benchmark indices. If your mutual fund consistently underperforms its benchmark or peers over a significant period (usually 1-3 years), it may be a sign to exit.
What to do: Regularly review the fund's performance and compare it with other funds in the same category. If it lags behind, consider selling and reallocating your investments to a better-performing fund.
The management team of a mutual fund plays a crucial role in its success. If there’s a significant change in the fund manager or the management team, it could impact the fund’s performance and strategy.
When to act: If a respected manager leaves and you’re not confident in the new team’s capabilities, it may be prudent to exit the investment, especially if the fund's performance starts to decline.
Mutual funds come with various fees, such as management fees, exit loads, and other expenses. If the costs of holding a mutual fund become excessive relative to the returns, it might be time to consider other investment options.
What to check: Review the total expense ratio (TER) of your fund. If it’s significantly higher than similar funds, or if you notice a decline in returns due to high fees, it may be time to sell.
Sometimes, broader market conditions or economic factors can signal a good time to exit mutual fund investments. For example, if there’s a market downturn, economic instability, or significant changes in government policies affecting your fund’s sector, you may want to consider selling.
When to monitor: Stay informed about economic news and market trends. If indicators suggest a prolonged downturn, you might want to shift to more defensive investments.
As your investments grow or shrink, your portfolio’s asset allocation can become unbalanced. Regularly rebalancing your portfolio is essential for maintaining your desired risk level and investment strategy.
How to proceed: If your mutual fund investments have grown to represent a larger portion of your portfolio than intended, consider selling a portion to realign with your target allocation.
If you find yourself in a situation where you need cash—whether for emergencies, medical expenses, or other urgent needs—selling your mutual fund investment might be necessary.
What to consider: Before selling, evaluate whether you can access funds from other sources without incurring losses. If mutual funds are your best option for quick liquidity, make the exit.
Every mutual fund investment should have a defined investment horizon, which is the time frame during which you plan to keep your money invested. Once you reach the end of that period, it may be wise to exit.
Example: If you invested in a mutual fund with a 5-year goal, and that period is approaching, reassess your options. If you’ve achieved your financial target or if your goals have changed, consider exiting.
Knowing when to exit your mutual fund investments is crucial for effective portfolio management. Whether due to changes in your financial goals, fund performance, market conditions, or personal circumstances, regularly reviewing your investments can help you make informed decisions.
Before making any decisions, always conduct thorough research and consider consulting a financial advisor. By being proactive and mindful about your investments, you can maximize your returns and achieve your financial objectives more effectively.
As India is suffering from a bad phase of coronavirus pandemic, a sudden demand for oxygen has been rising. As a result, the companies that produce oxygen or have the word “oxygen” in their names, are witnessing a strong rally in the stock market.
Due to the increase of COVID 19 patients in Mid April, the demand for medical oxygen rises, which in turn forces the central government to supply oxygen across the country.
Several reports indicate that there is an acute shortage of medical oxygen in the country and many hospitals are struggling to find enough oxygen for the patients.
As a result, the centre took immediate action by banning the supply of medical oxygen for industrial purposes and turned the supply into an essential public health commodity.
Several green corridors have been established to aid the rapid supply of oxygen through oxygen Express trains.
The rising demand for oxygen among Indian patients increases the shares of the companies that produce oxygen or have the word oxygen in their names.
For instance, National Oxygen Limited, Bombay Oxygen Limited and Bhagwati Oxygen - all the firms which are unlisted on the stock exchange - have experienced a sharp rise of 47% in April despite rising uncertainty and weakness in economic health.
From all the above points, one thing is clear that investors are keen to invest in the companies who supply medical oxygen to book good profits till the deficiency of oxygen lasts.
Meanwhile, some investors have mistakenly invested in the companies who have to do nothing with the oxygen, just have oxygen in their names. For example, Bhagwati Oxygen and National Oxygen Ltd are the producers of medical oxygen but Bombay Oxygen has ended its gas operations in 2019. Now it is a Non-Banking Finance Corporation.
Bombay Oxygen Investments Ltd was earlier known as Bombay Oxygen Corp Ltd. During the second wave of Covid 19, the shares of the company have gone up by 110 per cent at the beginning of April.
Here are some oxygen stocks witnessing a Strong Rally amidst the second phase of Covid 19:
1. Bombay Oxygen Investments Ltd:
Bombay Oxygen Ltd is a Non-Banking Finance Corporation (NBFC), that has ended its gas production in 2019. Now the company’s name is Bombay Oxygen Investments Ltd.
The company has a low return on equity of -2.52% for the last 3 years.
The company’s compounded sales for the last 5 years is -32.
The company is nearly debt-free.
The market capitalization of Bombay Investments Ltd is Rs 350.19 Crore.
2. National Oxygen Limited
National Oxygen Limited is an Indian company, primarily produces industrial gas such as Oxygen and Nitrogen.
The company has a market capitalization of Rs 30 Crore.
The 5 years compounded profit growth of the company was 13%.
The company has delivered a poor sales growth of 9.32% in the last 5 years.
Ratios as of March 20 are as follows:
ROCE: 9.85%
Debtors Days: 40
3. Gagan Gas Ltd:
Gagan Gas Ltd is a distributor of fuel gas companies mainly known as LPG have also gone up by 53 % in the last month, despite not having any news of producing oxygen gas.
The CAGR of the company before the second wave of COVID 19 is -10%.
The market capitalization of Gagan Gas is Rs 4 Crore.
For the last 3 years, the company has a low return on equity of 8.57%.
Compounded sales and profit growth for the past 5 years was -4% and -15%.
4. Bhagwati Oxygen Ltd:
Bhagwati Oxygen is a manufacturing company with the main focus on manufacturing industrial gases such as Oxygen and Nitrogen.
The company has a market capitalisation of Rs 4 crore.
The company has a low return on equity of 5.65% for the last 3 years.
As of March 2020, the company has high debtors of 369.87 days.
5. Everest Kanto Cylinder Limited
Everest Kanto Cylinder is India’s largest player in high-pressure gas cylinders with a market share of around 50%. The company has around 150 strong client base from numerous vertices including automobile OEM, city gas distribution, cylinder cascades, medical sector, defense including Bajaj Auto, Hyundai, Toyota, Adani Gas and more.
As per the acute shortage of oxygen cylinders amid the second wave of Covid 19, the company has expected to see a huge demand in its medical equipment segment.
The company has a market cap of Rs 1500 Crore.
The return on equity of the company for the last 3 years is 5.76% which is considered low.
The company has delivered a poor sales growth of 10% over the past 5 years.
6. Linde India Ltd:
Linde India Ltd formerly known as BOC India Ltd is a gas manufacturing company. The stock price has gone high in the past month whereas the stock’s CAGR before the second wave of Covid 19 is registered as 55.3%.
The market cap of Linde India ltd is Rs 15,943 Crore.
The company has had a low return on equity of 5.65% for the last 3 years.
The company is also debt-free.
The CAGR ratio of the company for the past 5 years is 52.75%.
Country’s Oxygen Crisis
The country’s sudden demand for oxygen gave a sharp rise to the oxygen-related stocks that has been driven by the scarcity of the commodity over the past few weeks.
According to several reports, oxygen production has been increased across the country to deal with the COVID 19 infected people.
Due to an excessive shortage of oxygen, the prices of oxygen cylinders in many parts of a country have more than doubled.
The rising demand for oxygen cylinders during the second wave of pandemic uplifted the company’s stock’s prices to a greater extent. However, many research analysts said that the rally of oxygen stocks to be short-lived as the demand for oxygen stocks is influenced by short term liquidity. Hence, it is suggested to check the fundamentals of the company before making any decision in the stock market.
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